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Dealer.com sold in transaction worth $1 billion

In one of the biggest deals ever for a Vermont business, Dealer.com says it has sold for nearly $1 billion to Dealertrack Technologies, a publicly traded company based in Lake Success, N.Y. The price tag: $987 million, comprised of $620 million in cash plus 8.7 million shares of Dealertrack stock.

In one of the biggest deals ever for a Vermont business, Dealer.com says it has sold for nearly $1 billion to Dealertrack Technologies, a publicly traded company based in Lake Success, N.Y.

The exact price tag, Dealertrack Chief Financial Officer Eric Jacobs said in a conference call Thursday evening with analysts: $987 million, comprised of $620 million in cash plus 8.7 million shares of Dealertrack.

“We believe the value created by the combination of the companies surpasses the sum of the parts,” said Mark O’Neil, chairman and chief executive officer of Dealertrack.

In an interview with the Burlington Free Press, Dealer.com co-founder and Chief Operating Officer Mike Lane said the company has 830 employees, about 700 of whom work in Burlington. He was adamant that Dealer.com is staying put.

“A lot of this is about the people,” Lane said. “Dealer.com is going to stay here. We’re not going anywhere.”

The price, Lane said, was right: “The valuation is fair for where we are as a company.”

Dealer.com has been one of the perennial business success stories in Vermont since its founding in 1998. The company serves more than 7,000 car dealers in the United States, out of a total of about 18,000, building their websites and providing inventory management software that helps them sell cars online.

Dealer.com also offers an advertising component that hooks dealers up with digital ads on Google, Yahoo and Facebook, and a customer relationship management system that gives dealers a range of tools to streamline their operations, from negotiating with buyers to tracking their dealership’s results.

Lane said all five co-founders of the company would be staying put in the wake of the sale. Mark Bonfigli is Dealer.com’s founder and was chief executive officer for 14 years before handing over the reins to current CEO and President Rick Gibbs in January 2013. Ryan Dunn is creative director of the digital experience and strategy team, and Jamie LaScolea is chief interface officer.

“Nothing is going to change,” Lane said. “Our mission is the same, just combined with another company that has a similar mission.”

Dealertrack Technologies provides “high-value web-based software solutions and services” to all major segments of the automotive retail industry, including dealers, lenders and original equipment manufacturers, or OEMs, according to a statement from the company. The company also has the industry’s largest online credit application network, connecting more than 20,000 dealers to more than 1,400 lenders.

In Thursday’s conference call with analysts, Dealer.com CEO Gibbs said the synergy between the two companies was apparent from the start of negotiations.

“When we were presented with this opportunity and got the chance to know the Dealertrack team, we recognized the two visions of the companies were very aligned,” Gibbs said. “When we saw what we could do together, it just seemed like a great match for the two companies to come together.”

Dealertrack also made it clear it was committed to keeping Dealer.com in Burlington, saying the company “places a high value on the culture of creativity and innovation that has been the hallmark of Dealer.com, and plans to establish Dealer.com’s Burlington, Vermont, headquarters as a center of excellence for digital marketing solutions, along with Dealertracks’ Dallas, Texas, office.”

Reactions to the deal poured in Thursday night. Gov. Peter Shumlin said the sale was “further proof that Vermont is a great place to start and grow a business.”

“Dealer.com has seen incredible success in Burlington,” Shumlin said. “The Dealertrack agreement is a huge vote of confidence in Dealer.com. Congratulations to Dealer management and its great employees.”

Added Commerce Secretary Lawrence Miller: “Look at the pricing of the deal: This buyer valued this company very highly. It’s a real nod to the company being acquired.”

Mike Lane, 38, thought back to the early days of the company, in the context of Thursday’s blockbuster sale.

“We knew something would happen one day,” Lane said. “Fifteen years ago, I think we thought we would go public in four years. But we were young and a little naive, too, then. The dot-com bubble burst in 2001. We just built a real company as a team, right here in Burlington. We’re really proud of it.”

Contact Dan D’Ambrosio at 660-1841 or ddambrosio@burlingtonfreepress.com. Follow him on Twitter at www.twitter.com/DanDambrosioVT.